Shine Star Vs DCIT (ITAT Mumbai)
Settling One Assessment Does Not Settle Another: ITAT Deletes ₹1.01 Crore Addition After AO Withheld Purchase Details
Two disputes may concern the same assessment year and alleged purchases, yet arise from different assessment orders. That distinction proved decisive in Shine Star. The Mumbai Tribunal held that the assessee’s settlement of an addition made in the original assessment under the Direct Tax Vivad Se Vishwas Scheme, 2020 did not extend to a later reassessment addition of ₹1,01,09,911. It then deleted the later addition because the Assessing Officer had not supplied the basic details of the alleged bogus purchases despite specific requests.
What had actually been settled?
Shine Star’s original assessment for AY 2014–15 was completed under section 143(3) on 27 December 2016. It included an addition of ₹68,23,155, calculated at 5% of disputed purchases of ₹13,64,63,096. The assessee appealed against that assessment and subsequently opted to settle the dispute under the Vivad Se Vishwas Scheme.
The declaration identified the original assessment order and the disputed income of ₹68,23,155. Form No. 5 was issued on 16 February 2022, and the appeal arising from the original assessment was dismissed as withdrawn following the settlement.
Separate reassessment proceedings produced a different result. A notice under section 148 was issued on 12 April 2021; further proceedings followed, including a fresh notice dated 28 July 2022. The reassessment order dated 26 May 2023 made a further addition of ₹1,01,09,911 under section 69 read with section 115BBE, based on alleged purchases from accommodation entry providers. The assessee appealed against that addition.
The same mistaken dismissal, twice
The Commissioner (Appeals) dismissed the reassessment appeal on the premise that the matter had already been settled under Vivad Se Vishwas. This was despite an earlier Tribunal order dated 9 May 2024 which had distinguished the original assessment dispute from the reassessment dispute and sent the latter back for decision on merits.
The distinction was subsequently confirmed by the Assessing Officer’s own remand report. On examining the records, the officer verified that the Scheme declaration and Form No. 5 concerned the 2016 original assessment and its ₹68,23,155 addition. The report specifically stated that the later reassessment and its ₹1,01,09,911 addition had not formed part of the declaration.
The Tribunal therefore set aside the Commissioner (Appeals)’s order. The fact that both proceedings related to AY 2014–15 did not make the settlement a blanket resolution of every dispute for that year. Its scope was established by the assessment order and disputed income identified in the declaration.
An allegation without the particulars needed to answer it
Having cleared the settlement issue, the Tribunal examined the reassessment addition itself. The Assessing Officer alleged purchases from accommodation entry providers. In response to a show-cause notice, the assessee specifically asked which parties and transactions were being referred to. Its letter dated 15 May 2023 referred to alleged purchases of ₹6,47,16,711 and the proposed addition of ₹1,01,09,911, and pointed out that the notices did not identify the parties to whom the allegation related.
This request was not raised for the first time before the Tribunal. The reassessment order itself recorded the assessee’s submissions. Yet the order did not show that the Assessing Officer had furnished the party names, purchase dates, invoices or transaction-wise material forming the basis of the proposed addition. Instead, he made the addition on the ground that the assessee had failed to provide adequate information about the alleged bogus purchases.
The Tribunal found that approach unsustainable. An assessee cannot be expected to explain purchases said to have been made from particular parties when the department does not identify the parties or the transactions despite a specific request. The reassessment order also failed to set out clearly how the figure of ₹1,01,09,911 was arrived at and linked to the alleged accommodation entry providers. The deficiency went to the assessee’s ability to answer the case against it, rather than being merely a failure to produce documents on its part.
The Tribunal consequently deleted the ₹1,01,09,911 addition and allowed Shine Star’s appeal. The remand report supported the assessee on the scope of the settlement; the deletion of the addition rested on the reassessment record and the failure to provide the requested particulars.
Author’s comment
This decision carries two distinct lessons. First, a Vivad Se Vishwas settlement must be read against the specific order and disputed income declared. Here, Form No. 5 closed the original assessment dispute; it did not close the subsequent reassessment dispute simply because both bore the same assessment year.
Second, an Assessing Officer alleging bogus purchases must disclose enough detail for the assessee to meet the allegation. Where the assessee asks for the party-wise and transaction-wise basis, withholding that information and then faulting the assessee for not explaining the purchases reverses the proper sequence. The Tribunal’s deletion is grounded in that concrete failure, not in a general finding that every purchase recorded by the assessee was genuine.
Cases Discussed
- Shine Star — ITA No.4742/Mum/2023; order dated 09.05.2024 — Tribunal held that the dispute arising from the original assessment alone had been settled under the Direct Tax Vivad Se Vishwas Scheme and restored the reassessment issues to the Commissioner (Appeals) for adjudication on merits.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
This appeal by the assessee is directed against the order dated 14.11.2025 passed by the learned Commissioner of Income-tax (Appeals), whereby the appeal of the assessee arising from the reassessment proceedings was dismissed on the ground that the dispute stood settled under the Direct Tax Vivad Se Vishwas Scheme, 2020.
2. At the time of hearing, the learned Authorised Representative (ld.AR) submitted that the reassessment proceedings giving rise to the impugned addition of Rs.1,01,09,911/- were separate and distinct from the original assessment proceedings completed under section 143(3) of the Act vide order dated 27.12.2016, wherein an addition of Rs.68,23,155/- had been made. It was submitted that the declaration under the Direct Tax Vivad Se Vishwas Scheme, 2020 related only to the original assessment proceedings and that the subsequent reassessment proceedings were never the subject matter of settlement under the said Scheme. The ld.AR further submitted that, on merits also, the addition could not be sustained since, during the course of reassessment proceedings, the assessee had specifically requested the Assessing Officer to furnish the particulars of the parties from whom the alleged purchases were stated to have been made, but no such particulars or corresponding details were furnished. It was submitted that the assessee had thus been denied the basic information necessary to effectively explain the allegation made against it. The learned Departmental Representative (ld.DR), on the other hand, relied upon the remand report submitted by the Assessing Officer.
3. We have carefully considered the rival submissions and perused the material available on record. The original assessment for the assessment year 2014-15 was completed under section 143(3) of the Act vide order dated 27.12.2016, wherein an addition of Rs.68,23,155/- was made, being 5% of the disputed purchases of Rs.13,64,63,096/-. The assessee preferred an appeal against the said assessment order. During the pendency of that appeal, the assessee opted for settlement under the Direct Tax Vivad Se Vishwas Scheme, 2020. The declaration filed by the assessee specifically related to Assessment Year 2014-15, section 143(3), order dated 27.12.2016 and disputed income of Rs.68,23,155/-. Form No.5 was thereafter issued on 16.02.2022. The learned CIT(A), vide order dated 24.08.2022, dismissed the appeal arising from the original assessment as withdrawn in view of the settlement under the Scheme.
4. The reassessment proceedings, however, were initiated independently and subsequently. Notice under section 148 was issued on 12.04.2021 in respect of alleged escapement of income on account of purchases from alleged accommodation entry providers. Thereafter, proceedings under section 148A were undertaken and a fresh notice under section 148 dated 28.07.2022 was issued. The reassessment proceedings culminated in an order dated 26.05.2023 passed under section 147 read with section 144B of the Act, whereby an addition of Rs.1,01,09,911/- was made under section 69 read with section 115BBE of the Act. Thus, the reassessment proceedings were distinct proceedings initiated subsequent to the original assessment and resulted in a separate addition of Rs.1,01,09,911/-. The question which arises at the threshold, therefore, is whether this subsequent reassessment proceeding and the addition made therein were also covered by the settlement under the Direct Tax Vivad Se Vishwas Scheme, 2020.
5. On this aspect, the remand report submitted by the Assessing Officer pursuant to the directions of the Tribunal assumes significance. The Assessing Officer, upon examination records, has categorically verified that the declaration under the Direct Tax Vivad Se Vishwas Scheme was made with reference to the original assessment order dated 27.12.2016 passed under section 143(3) of the Act and the disputed income of Rs.68,23,155/- arising therefrom. The Assessing Officer has further specifically reported that the subsequent reassessment proceedings under section 147 and the consequential addition of Rs.1,01,09,911/- under section 69 did not form part of the declaration under the Scheme. The remand report also records that Form No.5 issued on 16.02.2022 pertained to the original assessment proceedings and did not extend to the subsequent reassessment proceedings. Thus, the factual verification made by the Assessing Officer himself leaves no ambiguity that the settlement under the Direct Tax Vivad Se Vishwas Scheme was confined to the original assessment dispute involving the addition of Rs.68,23,155/- and did not cover the subsequent reassessment proceedings or the addition of Rs.1,01,09,911/- made therein.
6. We find that this factual distinction had already been specifically noticed by the Tribunal in its earlier order dated 09.05.2024 passed in ITA No.4742/Mum/2023. The Tribunal had observed that the dispute arising from the original assessment order under section 143(3) alone had been settled under the Direct Tax Vivad Se Vishwas Scheme and that the reassessment dispute had not been so settled. On that basis, the order of the learned CIT(A) was set aside and the issues relating to the reassessment proceedings were restored to the file of the learned CIT(A) for adjudication on merits. Despite the aforesaid specific direction, the learned CIT(A), vide the impugned order dated 14.11.2025, once again dismissed the appeal on the premise that the reassessment dispute also stood settled under the Direct Tax Vivad Se Vishwas Scheme. The said premise is contrary not only to the earlier finding of the Tribunal but also to the factual verification subsequently made by the Assessing Officer in the remand proceedings. In these circumstances, the impugned order of the learned CIT(A), insofar as it proceeds on the basis that the reassessment dispute stood settled under the Scheme, cannot be sustained and is liable to be treated as non est.
7. We now turn to the merits of the addition of Rs.1,01,09,911/-. From the reassessment order dated 26.05.2023, it is evident that the Assessing Officer proceeded on the allegation that the assessee had made purchases from alleged accommodation entry providers. The assessee, during the course of the reassessment proceedings, had specifically sought the particulars of the parties from whom the alleged purchases were stated to have been made and the material forming the basis of the allegation. In particular, in response to the show-cause notice dated 11.05.2023, the assessee, vide letter dated 15.05.2023, referred to the alleged purchases of Rs.6,47,16,711/- and the alleged under-assessment of income of Rs.1,01,09,911/-. The assessee specifically pointed out that nowhere in the order or notices was it mentioned to which party the alleged amount related. The assessee further referred to its earlier submissions and requested the Assessing Officer to furnish the details of the parties and the amounts pertaining to such parties.
8. Significantly, the aforesaid request of the assessee is not a matter which emerges merely from the submissions made before us. The reassessment order itself takes note of the submissions made by the assessee during the course of the proceedings. The assessee had thus placed before the Assessing Officer a specific and unequivocal request for the particulars of the parties and the transactions forming the basis of the proposed addition. However, the assessment order does not demonstrate that the particulars so sought, namely, the identity of the parties, the corresponding purchase transactions, the dates of purchases, the invoices or other transaction-wise material relied upon by the Assessing Officer, were furnished to the assessee before the addition was made. On the contrary, the Assessing Officer proceeded to hold that the assessee had not provided information regarding the alleged bogus purchases and made the addition of Rs.1,01,09,911/- under section 69 of the Act.
9. In our considered view, such approach cannot be sustained on the facts available on record. The assessee cannot be expected to satisfactorily explain an allegation relating to purchases from particular accommodation entry providers when the basic particulars of those very parties and transactions, which constituted the foundation of the allegation, were not furnished to the assessee despite a specific request. The assessee had specifically stated that the notices and proceedings did not disclose the parties to whom the alleged purchases related and had repeatedly requested the Assessing Officer to furnish such particulars. In such circumstances, the Assessing Officer could not reasonably proceed on the basis that the assessee had failed to furnish information regarding the alleged bogus purchases without first furnishing to the assessee the particulars and material on the basis of which such purchases were alleged to be bogus. The deficiency is therefore not merely one of the assessee failing to discharge an evidentiary burden; rather, the assessee was not furnished the basic particulars necessary for effectively responding to the allegation itself.
10. We further find that the reassessment order does not set out with sufficient clarity the transaction-wise basis for arriving at the figure of Rs.1,01,09,911/-. There is no proper identification in the assessment order of the parties from whom the alleged purchases were made, the corresponding dates and invoices, and the manner in which the disputed purchases were linked with the alleged accommodation entry providers. The assessee had specifically sought these particulars during the assessment proceedings. The Assessing Officer, instead of furnishing the particulars and thereafter examining the explanation of the assessee with reference to the specific transactions, proceeded to make the addition on the general observation that the assessee had not furnished sufficient documentary evidence. Such an approach, in the facts of the present case, does not provide a sustainable basis for the addition.
11. We have also taken into consideration the remand report relied upon by the ld.DR. The said report, as noted hereinabove, conclusively supports the assessee’s contention on the separate and distinct nature of the reassessment proceedings and establishes that the subsequent reassessment and the addition of Rs.1,01,09,911/- were not covered by the declaration under the Direct Tax Vivad Se Vishwas Scheme. The factual verification contained in the remand report therefore reinforces the conclusion that the learned CIT(A) proceeded on an erroneous factual premise while dismissing the appeal. However, on the merits of the addition, our conclusion is based upon the assessment record itself, particularly the specific requests made by the assessee during the reassessment proceedings and the failure to furnish the particulars sought by the assessee. The remand report merely confirms the factual distinction between the original assessment dispute settled under the Scheme and the subsequent reassessment dispute which remained to be adjudicated on merits.
12. In view of the foregoing discussion, we hold that the settlement under the Direct Tax Vivad Se Vishwas Scheme, 2020 was confined to the original assessment proceedings under section 143(3) of the Act dated 27.12.2016 and the addition of Rs.68,23,155/- arising therefrom. The subsequent reassessment proceedings and the consequential addition of Rs.1,01,09,911/- were not covered by the said settlement. The order of the learned CIT(A), insofar as it dismissed the appeal on the contrary premise, is therefore unsustainable and is set aside.
13. On examination of the reassessment proceedings on merits, we find that the assessee had persistently sought the particulars of the parties from whom the alleged purchases were stated to have been made and the corresponding details necessary to meet the allegation. The assessee’s request is itself referred to in the reassessment order. Yet, without furnishing such particulars, the Assessing Officer proceeded to make the addition on the ground that the assessee had not furnished sufficient information and documentary evidence. In the absence of the basic particulars of the alleged transactions having been furnished to the assessee, the addition of Rs.1,01,09,911/- cannot be sustained. Accordingly, the same is deleted.
14. In the result, the appeal of the assessee is allowed.
Order pronounced in the open Court on 22.09.2026.
